Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

<h2>KEY POINTS</h2>
<div></div>
<ul>
<li>AEye co-founder and GM of Automotive, Jordan Greene, laid out the case for investing in AEye at the Deutsche Bank Global Auto Industry Conference: (1) software-defined technology that can optimize in real time for each scenario; (2) capital-light business model; (3) experienced management team; (4) significant partners with design wins; and (5) a total addressable market (TAM) of more than $40 billion by 2030.</li>
<li>AEye is the global leader in adaptive, high-performance LiDAR solutions. Its software-driven LiDAR platform (4Sight™ Intelligent Sensing Platform) and its partnering and licensing business model are key to AEye’s differentiation and significant multi-market revenue runway.</li>
<li>With the LiDAR TAM expected to grow from $3 billion to $42 billion over the next 10 years, Wall Street consensus has AEye’s revenues growing to $33 million by 2023, a 250%+ CAGR. The company could see longer term revenue CAGR of more than 150%.</li>
<li>AEye’s secret sauce is its flexible and adaptive technology platform, 4Sight™, which is a complete bistatic system that allows software to control its focus in real time, much like sophisticated military systems. This capability allows AI driven dynamic asset applications to be built for multiple markets from the same hardware.</li>
<li>The biggest design win to date is with Tier 1 auto supplier Continental, which selected AEye to meet premium OEM requirements. It has jointly engaged six OEMs with AEye and it plans to have the AEye/Conti automotive product line launch in 2024. Continental supplies advanced driver assistance systems (ADAS) to 25 auto OEMs, covering 50 brands and 300 models. It delivered 100 million ADAS units from 2017 to 2019. With more than $50 billion in sales and 241,000 employees in 59 countries, Continental is one of the leading Tier 1 suppliers in the world.</li>
</ul>
<h2>COMPANY OVERVIEW</h2>
<div></div>
<p>AEye’s unique software-defined LiDAR solution enables advanced driver-assistance, vehicle autonomy, smart infrastructure, logistics, and off-highway applications that save lives and propel the future of transportation and mobility. AEye’s 4Sight™ Intelligent Sensing Platform, with its adaptive sensor-based operating system, enhances perception by focusing on what matters most; delivering faster, more accurate, and reliable information. The company’s 4Sight™ products, built on this platform, are ideal for dynamic applications that require precise measurement imaging to ensure safety and performance. AEye has global presence through its offices in Germany, Japan, Korea, and the United States.</p>
<p>The company’s two initial markets are automotive and industrial &amp; mobility. AEye expects its auto/industrial revenue split to eventually be 55/45. The automotive ADAS business should be ramping up over 2023-25. Industrial will likely generate more revenue over the near-term years. As volume ramps, cost per unit should drop significantly. Today AEye’s industrial systems can run $75-150k in price. AEye believes it can get the price of its industrial units down to $10k, which should enable many more use cases and grow the market.</p>
<p>Read our initiation and other reports on&nbsp;AEye&nbsp;on our website.</p>
<h2>PARTNERS</h2>
<h2>AEye’s Partners Validate Its Technology, Business Model, and Market Opportunity</h2>
<p>Looking to a technology company’s partners can give investors both insight and confidence in its capabilities, both its technology and its meeting of the market’s needs. Certainly, Continental’s selection of AEye is key, but additional partners like Hitachi, Mitsubishi, and Komatsu show it has multiple avenues for success</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/281/753/original/image_650159978101655683493688.png?1655683496" class="editor-image img-responsive" data-smartkarma-image-id="281753"></figure>
<p>One reason AEye has these significant partners is the opportunity for LiDAR is large—more than $40 billion by 2030. AEye’s software-defined approach has several advantages.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/281/754/original/image_516834487111655683510256.png?1655683512" class="editor-image img-responsive" data-smartkarma-image-id="281754"></figure>
<h2>DISCLOSURES</h2>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>John Roy, PhD, who is the writer of this report, covers the Technology sector for WTR. Mr. Roy, PhD and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.<br><br>WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY POINTS


AEye co-founder and GM of Automotive, Jordan Greene, laid out the case for investing in AEye at the Deutsche Bank Global Auto Industry Conference: (1) software-defined technology that can optimize in real time for each scenario; (2) capital-light business model; (3) experienced management team; (4) significant partners with design wins; and (5) a total addressable market (TAM) of more than $40 billion by 2030.
AEye is the global leader in adaptive, high-performance LiDAR solutions. Its software-driven LiDAR platform (4Sight™ Intelligent Sensing Platform) and its partnering and licensing business model are key to AEye’s differentiation and significant multi-market revenue runway.
With the LiDAR TAM expected to grow from $3 billion to $42 billion over the next 10 years, Wall Street consensus has AEye’s revenues growing to $33 million by 2023, a 250%+ CAGR. The company could see longer term revenue CAGR of more than 150%.
AEye’s secret sauce is its flexible and adaptive technology platform, 4Sight™, which is a complete bistatic system that allows software to control its focus in real time, much like sophisticated military systems. This capability allows AI driven dynamic asset applications to be built for multiple markets from the same hardware.
The biggest design win to date is with Tier 1 auto supplier Continental, which selected AEye to meet premium OEM requirements. It has jointly engaged six OEMs with AEye and it plans to have the AEye/Conti automotive product line launch in 2024. Continental supplies advanced driver assistance systems (ADAS) to 25 auto OEMs, covering 50 brands and 300 models. It delivered 100 million ADAS units from 2017 to 2019. With more than $50 billion in sales and 241,000 employees in 59 countries, Continental is one of the leading Tier 1 suppliers in the world.

COMPANY OVERVIEW

AEye’s unique software-defined LiDAR solution enables advanced driver-assistance, vehicle autonomy, smart infrastructure, logistics, and off-highway applications that save lives and propel the future of transportation and mobility. AEye’s 4Sight™ Intelligent Sensing Platform, with its adaptive sensor-based operating system, enhances perception by focusing on what matters most; delivering faster, more accurate, and reliable information. The company’s 4Sight™ products, built on this platform, are ideal for dynamic applications that require precise measurement imaging to ensure safety and performance. AEye has global presence through its offices in Germany, Japan, Korea, and the United States.
The company’s two initial markets are automotive and industrial &amp; mobility. AEye expects its auto/industrial revenue split to eventually be 55/45. The automotive ADAS business should be ramping up over 2023-25. Industrial will likely generate more revenue over the near-term years. As volume ramps, cost per unit should drop significantly. Today AEye’s industrial systems can run $75-150k in price. AEye believes it can get the price of its industrial units down to $10k, which should enable many more use cases and grow the market.
Read our initiation and other reports on&nbsp;AEye&nbsp;on our website.
PARTNERS
AEye’s Partners Validate Its Technology, Business Model, and Market Opportunity
Looking to a technology company’s partners can give investors both insight and confidence in its capabilities, both its technology and its meeting of the market’s needs. Certainly, Continental’s selection of AEye is key, but additional partners like Hitachi, Mitsubishi, and Komatsu show it has multiple avenues for success

One reason AEye has these significant partners is the opportunity for LiDAR is large—more than $40 billion by 2030. AEye’s software-defined approach has several advantages.

DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  John Roy, PhD, who is the writer of this report, covers the Technology sector for WTR. Mr. Roy, PhD and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Co-Founder Details How AEye Will Win at the Deutsche Bank Global Auto Industry Conference